Sometimes situations arise when our financial condition is rather dire so much so that we have to look around for loans and other options. Online payday loans are an exciting method to tackle such short- term requirements of money.
However, finances are always something that you have to tackle carefully. If you are looking around for ways to get some extra funds, you have to be discreet about it.
Here we will tell you 7 crucial things to keep in mind while booking online payday loans.
Things to pay attention to when booking online payday loans Alberta
Understand the purpose of a loan
Firstly you need to understand why any loan provider will give funds to someone. The payday loans have a specific reason and cannot be availed of in every situation. As a borrower, you should not consider them a permanent credit facility like a credit card or revolving credit facility.
You can get payday loans in Alberta only in cases of emergency or sudden changes in finances. Other loans that are taken for the short term have unusually high-interest rates. Invariably you as a borrower end up paying more than the total amount. However, with a payday loan, the situation is better as the rate of interest is still under control.
Calculation of money required
Before contacting anyone for the money, you must know how much money is required. It is only when you have reached a final figure that you can proceed further. Actually, short-term loans are expensive, so only borrowing the necessary amount makes the repayment easy.
Whatever extra amount you pile on, it will only increase the interest rate. Sometimes certain loan providers give you the option of top-up on an existing loan. This provision is made only if you have paid at least 50% of the previous loan. In case the previous dues are pending, it is foolhardy asking for additional funds.
Find out how much you can pay every month
Next, you will have to do some financial planning. Only you know your finances and thus, deciding how much you can afford to pay is something you know. For example, if you are getting a loan of $500 per month and the monthly repayments are making a dent in your savings by 20 or 30$, then you should avoid that loan.
Instead, ask the loan provider if he could increase the term of the loan, so the situation is not very dire. However, again here is a catch that if you have a longer loan, the total amount paid in interest is more.
Read all the terms and conditions carefully
You have all kinds of loan providers in the market. While some are reliable, few are there to make some extra money. Therefore, reading the terms and conditions of the loan document is an absolute necessity.
Always remember that you are not obliged to accept any loan. If, after reading the terms and conditions, you are not satisfied, you can always reject the offer. However, by no means you should accept a situation where there is a mention of a clause that can affect your credit in the long run. There are a set of guidelines that all loan providers have to write. If there is anything different from that, you should read it carefully.
Analyze the risks
Have you ever heard of risk management or tried applying it in your life? It is the trick to analyzing risks before you take any major financial decision. If you move ahead with the loan without understanding the risks, your decision will cause trouble.
Most of the lending companies are thankfully not interested in your financial problems as such. However, you must still understand what will happen if you are unable to pay the amount. You would get some sort of relief from the lender, but how much and what are the consequences?
Naturally, you may have to pay some penalty for defaulting, which is a cause of concern. Also, if again you miss the payments, they would mark you as a defaulter. Eventually, this can negatively hamper your credit history.
Make sure that you are borrowing from a trustworthy service provider
Every day you get to read many news headlines about how payday loan companies are frauding customers. Obviously, you will not want to land in this situation. Though regulations have been imposed on such companies, not all of them adhere to it.
To avoid getting duped, always opt for a company that has a credible customer base already. Online reviews are an exciting method to gauge the reputation of a loan provider. Also, make sure that the company has the license to lend money. If they cannot show the required paperwork to you, trusting them will not be something you can do.
Understand how these loans would affect your credit score
Your credit score says a lot about your financial standing. However, if you continue taking short term loans, the credit history is going to dip. Also, if you apply for too many loans simultaneously, your chances of getting rejected increase.
This is because loan providers think that your situation must be rather bad. Certain mortgage providers will give the facility only to people who have exact credit scores. So for future effects also you should try and maintain a clean record when it comes to taking payday loans.
For small-time finance requirements, you can always take a payday loan. The interest rates are fair enough, and if you keep paying on time, your credit score remains fine. However, to escape falling into a trap to dubious companies, check their credentials.
Online you can find reviews of such lending companies. If there are discrepancies in people’s opinion, it is advisable to ignore such a lender. Choose wisely and take up payday loans only when you have no other option left. If you continue monitoring your finances very soon, you will be able to manage your accounts, and the need to survive paycheck may not arise at all.